BRANDEIS 
Washington  Street  Subway 


HE 
W91 

B8 

8735 


UCSB   LIE 

WASHINGTON   STREET  SUBWAY 


COMM  ENTS 


ON    THE 


Financial  Condition  of  the  Boston  Elevated  Railway  Co, 


SUBMITTED    BY 


LOUIS   D.  BRANDE1S 


ON    BEHALF   OF    THE 


BOSTON  ASSOCIATED  BOARD  OF  TRADE 


TO    THE 


COMMITTEE  ON  METROPOLITAN  AFFAIRS 


MASSACHUSETTS  LEGISLATURE. 


APRIL  26,  1902 

CSB    LIBRAE 


To  THE  COMMITTEE  ON  METROPOLITAN  AFFAIRS  : 

On  April  14,  1902,  Mr.  Pillsbury  addressed 
Hearing  of  your  Committee  in  opposition  to  the  Wash- 
ington Street  Subway  Bill,  originally  introduced 
at  the  request  of  the  Boston  Associated  Board  of  Trade  and 
the  Public  Franchise  League,  and  which  (in  a  slightly 
amended  form)  has  been  adopted  by  Mayor  Collins  as 
expressing  the  wishes  of  the  people  of  Boston  and  is  urged 
by  him  for  immediate  passage. 

Mr.  Pillsbury  purported  to  state  "frankly  and 
Purported  fully"  the  financial  condition  of  the  Boston 

T"\5      1 

Elevated  Railway  Company,  and  asserted  that 
this  condition  afforded  a  conclusive  reason  why  "the  burden" 
of  a  new  subway  should  not  be  assumed  by  it. 

In  the  few  minutes  then  remaining  for  reply,  I 
Multum  stated  to  your  Committee  reasons  why  we  be- 

.lieve  that  the  Company  can  afford  to  take  the 
new  subway  on  the  terms  proposed  by  our  bill ;  that  it  will 
gladly  do  so  if  it  finds  that  the  Legislature  will  not  grant  even 
better  terms  ;  and  that  the  opposition  of  the  Boston  Elevated 
Railway  Company  is  based  really  on  the  desire  to  secure 
permanent  franchises. 

I  now  submit  in  more  detail  some  of  the  facts 
Analysis  relating  to  the  financial  condition  of  the  Com- 

pany upon  which  our  conclusions  are  based. 

Net  Earnings    Not   Decreasing 

FIRST.  Mr.  Pillsbury  says — referring  to  the  operation 
of  the  system  by  the  Elevated  Railway  Company  during  the 
four  years  from  September  30,  1897,  to  September  30, 
1901, — "Net  earnings  are  increasing  in  but  half  the  ratio  of 
gross  earnings." 

This  statement  is  incorrect. 


According  to  the  Company's  reports  net  earnings 
Almost  Four  are  increasing  in  a  greater  ratio  than  gross 

earnings,  for  the  percentage  of  operating  ex- 
penses to  gross  earnings  has  decreased  materially  during  that 
period,  namely  : 

Operating  Expenses: 
Per  Cent,  of  Gross  Earnings 

1898     ..............     71.53 

1899  ..............  7°-59 

1900  ..............  67.23 

1901  ..............  67.97 

More  Than       And  net  earnings  from  operation  during  those 
$800,000  years  have  increased  as  follows  : 

1898  ..........    $2,612,512.19 

1899  ..........       2,844,290.37 


3»456>395-78 

As  compared  with  the  last  two  years  of  the 
West  End  operation  of  the  System  by  the  West  End  Street 

Railway  Company  the  decrease  in  the  cost  of 
the  operation  is  even  more  marked  : 

Operating  Expenses: 
Per  Cent,  of  Gross  Earnings 

'896  ..............  75-93 

1897  ..............  71.26 

The  actual  net  earnings  from  operation  in  those   years 
having  been  as  follows  : 

1896  ..........    $2,007,339.15 

1897  ..........       2,505,323.22 

These  figures  show  that  during  the  four  years 
By  Almost  (ending  September  30,  1901,)  since  the  lease 
a  Million  of  the  Wegt  End  gtreet  Railway  system  by 


the  Boston  Elevated  Company,  the  gross  earnings  from  oper- 
ation increased  $2,073,961.31  or  23.78%,  while  the  net 
earnings  from  operation  increased  $951,072.56  or  37.96%. 

4 


The  Fact  About  Fixed  Charges 

SECOND.     Mr.    Pillsbury   says   that   there   has 
Half  of  been  "an  increase  in  fixed  charges  in  the  four 

*T*       it, 

years  of  Elevated  operations  of  $748,034,  or 
84.9%  exclusive  of  West  End  dividends." 
This  statement  is  at  least  misleading. 

Aside  from  Subway  rental    (which  the  West 
Chief  Item          End  ha(J  assumed  before  jts  lease  to  the  E]e. 

vated)  and  the  increase  in  the  taxes  (due  mainly  to  the  great 
rise  in  market  values  of  West  End  and  Elevated  stock)  the 
entire  increase  in  fixed  charges  was  $87,950.67,  which  repre- 
sents interest  on  money  borrowed  by  the  West  End  Company 
under  direction  of  the  Elevated  Company  to  pay  for  88  miles 
of  additional  surface  track  —  the  total  track  for  surface  cars 
operated  by  the  Elevated  Company  having  increased  from 
304  miles  on  September  30,  1897,  to  392  miles,  September 
30,  1901. 

Without  the  increased  facilities  afforded  by  the 
^°  l  existing  subway  and  the  increased  mileage  the 
great  increase  in  gross  earnings  from  operation  would  have 
been  impossible.  For  the  two  years  prior  to  the  lease  to  the 
Boston  Elevated,  the  gross  earnings  from  operation  of  the 
West  End  and  the  number  of  revenue  passengers  carried 
were  as  follows : 

Gross  Earnings          Revenue  Passengers 
1896..        ..$8,341,958.29          166,862,288 
1897    ••        "     8,719,031.78          172,554,513 

$500,000  and      For  the  four  years  after  the  lease  to  the  Boston 

Elevated  the  gross  earnings  from  operation  and 
Passengers  .  " 

revenue  passengers  carried  were  as  follows  : 

Gross  Earnings  Revenue  Passengers 


1898  .. 

..$9,179,096.35 

181,321,295 

1899  .. 

..  9,671,440.67 

191,023,224 

I  900  .  . 

.  .  10,141,209.68 

201,124,710 

1901  .  . 

.  .  10,792,993.09 

2I3»7°3>983 

5 

Elevated  Far 


In  other  words  :     The   gross   earnings   in   the 
four   years,  September  30,   1897,    to    Septem- 
ber 30,  1901,  increased     ..      ..   $2,073,961.31 
The  net  earnings  from  operation  increased     $951,072.56 
(all  from  the  surface  lines  except  during   the   short   period 
from  June  10  to  September  30,  1901). 

And  the  total  increase  of  fixed  charges,  other  than  or- 
dinary taxes,  was  : 

Increase  in  interest   ..........  $  87,950.67 

Increase  in  net  Subway  rental,  about  .  .    189,541.33 
Compensation  tax   ..........      94,438.69 


Increase  of  net  earnings  over  increase 

in  charges  other  than  ordinary  taxes,    $577,183.20 

This  alone  was  sufficient  to  pay  the  5^%  dividend  on 
the  $10,000,000  Elevated  Company  stock. 

On  the  other  hand,  Mr.  Pillsbury  does  not 
Great  Saving  disclose  to  the  Committee  the  reduction  in  fixed 
charges  about  to  begin  by  which  one-half  of  all 
outstanding  bonds  will  be  refunded  at  a  low  rate  of  interest, 
say  3-75%,  which  will  effect  a  reduction  in  the  fixed  charges 
of  about  $65,500. 

The  following  bonds  are  about  to  mature :  — 
Highland  Street  Rwy.  Co.,  5%,  due  May,  '02,   $    300,000 
West  End  "  "      5%, 

Cambridge          "  "       5%, 

Metropolitan      "  "      5%, 

Charles  River    "  "      5%, 

Middlesex  "  "      5%, 

South  Boston     "  "      5%, 

Boston  Cons.     "  "      5%, 

$5,240,000 

The  annual  saving,  refunding  these  on  the  basis  of  say 
3-75 %•>  will  be  $65,500.      It  thus  appears  that  when  these 

6 


" 

Nov., 

'02, 

3,000,000 

" 

Apr., 

'03, 

390,000 

<t 

Dec., 

'03, 

500,000 

<( 

Apr., 

'04. 

150,000 

u 

July, 

'04, 

200,000 

u 

May, 

'05, 

200,000 

(C 

June, 

'07, 

500,000 

refunding  operations  are  completed  the  net  increase  of  interest 
charge,  in  spite  of  88  miles  of  new  surface  tracks,  will  be 
only  $22,450.67. 

Concerning  Increased  Taxes 

THIRD.  Mr.  Pillsbury  says  :  "The  percentage  of  taxa- 
tion to  investment  in  1897  was  1.5.  In  1901  it  was  2.3. 
While  the  investment  is  rapidly  increasing  especially  with  the 
construction  of  the  elevated  road,  taxation  is  increasing  in 
nearly  two  and  one-half  times  the  ratio  of  investment." 

This  statement  is  misleading. 

The  rate  of  taxation  has  not  increased  appre- 
Taxation  ciably  since  1897.     The  increase  of  taxes  is  due 

to  the  increase  in  the  market  value  of  the  stock 
Valuation 

taxed.     That  increase  in  market  value  is  due 

largely  to  the  special  privileges  granted  by  the  State  to  the 
Elevated  Railway  by  the  act  passed  June  10,  1897. 

Mar.  val.  Mar.  val.  Mar.  val.  Mar.  val. 

pr.  sh.  total  cap.  pr.  sh.  total  cap. 

May  i,  '97.  May  i,  "97.         May  i,  '01.  May  i,  '01. 

West  End  pfd.,  $94  $12,032,000  $117.00  $14,976,000 
West  End,  com.  72  13,082,400  98.50  17,897,450 
Boston  Elevated, 

(1898  to  1900) 

issued  at  105       10,500,000       177.00       17,700,000 

$35»6l4»400  $5°»573>45° 

The  effect  of  the  Act  of  1897  (as  the  opponents 

On  a  Gift  of  of  thaf  \j\\\  predicted)  was  to  make  a  present  to 
cc  non  nnn 

the  West  End  stockholders  of  franchises  shown 

to  be  worth,  by  the  rapid  rise  in  the  stock,  fully  $5,000,000. 
The  additional  taxes  paid  since  1897  are  merely  taxes  on 
the  gift  then  made  by  the  State  at  the  request  of  the  Boston 
Elevated  Railway  Company.  The  taxes  paid  by  the  Com- 
pany on  the  market  value  of  all  stock  relieve  the  stockholders 
from  the  payment  of  any  taxes  and  make  the  dividend  re- 

7 


ceived  a  net  income.  The  market  value  is  high  not  only 
because  the  dividend  is  high,  but  also  because  the  stock  is 
exempt  from  taxes. 

The  rate  of   dividend  on  the  West  End  stock 
Increase  being   limited   since  the  lease  to  the  Elevated 

Company,  there  has  been  no  further   appreci- 
able  rise   in   the   market  value   of   the  West   End  stock  or 
increase  in  the  taxes  paid  on  account  of  that  stock.. 
Tax  paid  on  West  End  stock  and  property  : 

1899  ..........  $500,575.24 

1900  ..........   5°4>748-45 


and  further  appreciable  increase  is  not  to  be  expected. 

Mr.  Pillsbury  says  :  "We  are  paying  more  to 
the  public  today  in  taxes  than  we  are  paying  to 
our  stockholders  in  dividends  by  the  sum  of  $320,000  per 
annum."  The  dividend  is  stated  at  "5^%,  $575,000. 
Taxes  in  1901,  $895,065."  The  comparison  is  misleading. 
The  taxes  given  are  the  total  on  the  whole  system,  West  End 
and  Elevated  ;  the  dividends  given  are  only  the  dividends  on 
the  Elevated  stock.  But  the  dividend  on  the  West  End 
stock  is  $1,147,950.  So  that  if  the  total  tax  is  $895,067,  the 
total  paid  in  dividends  is  $1,722,950,  a  sum  not  $320,000 
less,  but  $827,883  more  than  the  tax. 

Ratio  of  Permanent  Investment  to  Net  Earnings 

FOURTH.  Mr.  Pillsbury  says  :  "  In  the  last  four  years 
we  have  added  nearly  $17,000,000  to  the  permanent  invest- 
ment, which  has  increased  in  more  than  four  and  a  half  times 
the  ratio  of  net  earnings,  so  that  while  in  1897  the  net  income 
of  the  investment  was  8.4%  it  is  now  but  6.i%." 

This  statement  is  grossly  misleading. 

Discrepancy        (A)     The  balance  sheet  of  September  30,  1901  , 
•S3  000*000          shows  but  $14,316.08  increase  in  invested  cap- 

ital.   The  only  new  capital  invested  in  the  West 
8 


End-Boston  Elevated  System  from  September  30,   1897,  to 
September  30,  1901,  is  the  following  : 

(1)  The  amount  raised  by  the  issue  of  West  End  Street 
Railway  Company  debentures  sold  on  a  basis  of  about  3^% 
and  used  to  pay  for  the  eighty-eight    miles  of   extention  of 
surface  lines. 

(2)  $10,500,000  raised  by  the  sale  of  Boston  Elevated 
Railway  Company  stock  to  construct  the  Elevated  railroad. 

The  additional  cost  of  the  Elevated  Railway  up 
Not  New  t0  September  30,  1901,  alleged  to  be  about 

$2,500,000,  seems  to  have  been  paid  for  since 
September  30,  1901,  not  from  new  capital  invested,  but  in 
part  from  money  borrowed  temporarily  on  the  market  at  a 
low  rate  of  interest,  and  in  part  from  funds  earned  by  the 
Boston  Elevated  Railway  Company  during  the  four  years 
between  September  30,  1897,  an<^  September  30,  1901,  and 
set  apart  (in  addition  to  the  dividends  paid)  as  special  funds, 
namely : 

Damage  Fund $425,262.48 

Insurance  Fund 300,000.00 

Depreciation  Fund     . .      . .        600,000.00 
Surplus  Fund      663,509.07 

$1,786,771.55 

(B)  The  principal  answer,  however,  to  the 
statement  of  Mr.  Pillsbury  is  this  : 

The  earnings  made  by  reason  of  seven  miles 
Elevated  of  Elevated  lines  which  he  says  cost  them 

Earnings  $12,500,000,  are  not  represented,  except  to  a 

Ignored  slight  extent,  in  the  earnings  of  the  years  ending 

September  30,  1901.  No  part  of  the  Elevated 
lines  was  opened  until  June  10,  1901.  The  Atlantic  Avenue 
line  was  not  opened  until  August  22,  1901.  The  full  earning 
capacity  of  these  lines  is  even  now  impaired  by  reason  of 
insufficient  cars,  the  fifty  additional  cars  required  and  ordered, 
as  Mr.  Pillsbury  states,  not  having  arrived.  Some  idea  may 

9 


however  be  formed  from  data  at  hand  of  the  probable  increase 
by  reason  of  the  Elevated  lines  when  fully  equipped  :  Presi- 
dent Bancroft  says  in  the  report  to  the  stockholders  for  the 
year  ending  September  30,  1901,  "The  increase  in  traffic 
revenue  during  the  months  in  which  the  Elevated  road  was  in 
operation  as  compared  with  the  increase  in  the  corresponding 
months  of  the  previous  years  was  8.57%  as  against  3.54%. 

In  other  words,  an  extra  increase  of  traffic  of 
Revenue  over  5%  was  made  during  the  whole  period 

Increased  from  June  10,  1901  to  September  30,  1901, 

although  part  of  the  Elevated  lines  was  not 
opened  until  August  22,  1901  and  none  of  it  was  adequately 
equipped.  This  extra  5%  increase  of  revenue  passengers, 
continued  throughout  the  year  at  the  same  operating  cost 
would  yield  about  $352,125.32  additional  gross  earnings 
and  $112,680.10  net  earnings,  if  the  percentage  of  operating 
expenses  remained  the  same. 

To  point  to  last  year's  income  as  showing  what 
An  Absurd  the  system  earns  is  as  misleading  as  if  a  real 
Comparison  estate  owner  who  had  expended  $12,500,000 

on  additional  buildings  which  were  not  com- 
pleted until  three  months  before  the  end  of  the  year  and  even 
then  were  not  fully  occupied  took  the  year's  net  income  as  a 
test  of  the  net  earning  capacity  of  the  whole  property. 

Elevated    System    a    Benevolent    Enterprise? 

FIFTH.  Mr.  Pillsbury  says:  "The  truth  is  that  the 
whole  Elevated  system  was  created  and  exists  more  for  the 
relief  of  travel  than  any  addition  to  profits  of  the  system,  for 
passengers  who  take  the  Elevated  trains  do  not  at  the  same 
time  take  surface  cars." 

(a)  It  must  be  a  surprise  to  the  community  to 
Capitalization  learn  that  the  Boston  Elevated  Railway  Com- 
of  West  End  pany  was  "created"  by  the  New  York  and 

n      r*.  i          J  J 

Boston  bankers,  as  an  eleemosynary  institution, 
and  not  for  the  purpose  of  capitalizing  the  immense  profits  of 

10 


the  West  End  System.      (The  surplus  in  1897  over  a 
dends  was  $431,572.66.) 

(b)   It  certainly  is  not  true  that  "the  Elevated 
Development      Hnes  „  do  nQt  exigt  nQw  fof  the  44profit  of  the 


at  a  Standstill 

system."    The  fact  is  that  while  the  building  of 

the  Elevated  lines  was  compulsory  under  the  Act  of  1897, 
it  was  necessary  also  in  order  to  maintain  the  increase  in  earn- 
ings for  the  Company  to  have  these  Elevated  lines,  just  as  the 
existing  subway  had  become  necessary  in  1897,  and  the  new 
Washington  Street  Subway  will  be  as  imperatively  necessary 
by  the  time  it  can  be  completed. 

The  increase  in  revenue  passengers  on  the  West  End 
lines  in  1896  over  1895  had  been  11,630,782.  The  increase 
in  gross  earnings  was  $595,787.52.  The  increase  in  revenue 
passengers  of  1897  over  1896  was  only  5,692,225  and  the 
increase  in  gross  earnings  only  $377,073.49. 

The  reason  for  the  diminished  rate  of  growth  was  that 
the  carrying  capacity  of  the  road  in  the  heart  of  the  city  had 
been  practically  reached. 

In  the  fall  of  1897,  after  the  subway  was  opened,  the 
large  increase  in  revenue  passengers  carried  and  in  gross 
earnings  was  resumed. 

Revenue  Passenger  Gross  Earnings 

Increase  Increase 

1898  .  .        5.08%  $    8,766,782  $460,064.57 

1899  ••     5-33%  9>7OI>929          492>344-32 

1900  ..     5.28%  10,101,486          469,769.01 

In  1901  before  the  opening  of  the  Elevated 
History  lines,  the  carrying  capacity  in  the  heart  of  the 

city  had  again  been  practically  reached  so  that 
the  increase  in  the  revenue  passengers  and  gross  earnings  of 
the  System  for  the  eight  months  and  ten  days  up  to  June  10, 
1901,  (when  the  first  Elevated  lines  were  opened)  was  only 
3.54%  as  against  an  average  of  4.47%  during  the  three  pre- 
ceding years.  Upon  the  opening  of  the  Elevated  lines  the 
increase  jumped  to  8.57$,  and  when  fully  equipped  the 
increase  will  doubtless  be  larger. 


But  full  equipment  of  the  Elevated  lines  will 
Self  Interest  nO(-  suffice  unless  they  can  be  run  to  the  best 

1?  * 

advantage,  and  it  is  obvious  that  the  Elevated 
New  Subway 

lines   cannot   be    so    run   except    through    the 

Washington  Street  subway.  The  Elevated  Company  needs 
the  new  subway  for  its  added  carrying  capacity  and  for  its 
greater  economy,  just  as  in  1897  the  existing  subway,  and  in 
1901  the  Elevated  lines  had  become  necessary  for, its  con- 
tinued prosperity. 

No  New  Obligations   Before   1905 

SIXTH.    Mr.   Pillsbury  says:     "Our  earnings   must   be 
allowed  to  overtake  our  obligations." 

It  must  be  remembered  that  the  rental  of  the 
A  Margin  new  subway  will  not  be  payable  until  the  sub- 

way is  built,  that  is,  not  before  October,  1905. 
Meanwhile  substantially  no  new  obligations  will  be  assumed 
by  the  Elevated  Company. 

On  the  other  hand,  net  earnings  from  opera- 
Lesson  of  tions  owing  to  growing  traffic  will  be  steadily 
increasing.  An  increase  of  gross  earnings  for 
the  three  years  even  at  so  low  a  rate  as  five  per  cent, would  yield 
$1,701,245.62,  and  at  the  present  operating  cost,  $544,398.60 
additional  net  earnings  before  any  new  subway  rental  becomes 
payable.  As  soon  as  the  new  subway  is  opened  largely  in- 
creased traffic  and  earnings  must  result  according  to  uniform 
experience. 

The  Rate  of  Rental 

SEVENTH.  Mr.  Pillsbury  says  that  the  bill  ad- 
Stultification  vocated  by  Mayor  Collins,  the  Board  of  Trade 
and  others  cannot  be  accepted,  because  in  requiring  a  rental 
of  4^  %  of  cost  it  imposes  too  great  a  burden  on  the  Elevated 
Company.  The  action  of  the  Elevated  Company  last  year 
shows  conclusively  that  such  is  not  the  opinion  of  the 
Company. 

12 


At  the  last  session  of  the  Legislature  the  Ele- 
Inconsistent  vated  Company  endeavored  to  have  a  bill  passed 
with  Attitude  b  which  it  shou]d  the  whole  CQSt  of  the 

of  Last  Year          *  «      '    «  • 

new  Washington  Street  bubway  to  be  owned 

by  the  City,  but  leased  to  the  Elevated  Company  free  for  forty 
years.  The  cost  was  estimated  at  $6,000,000,  and  the  con- 
struction of  the  subway  under  that  bill  would  have  placed 
upon  the  Company  an  annual  charge  of  at  least  4^3  %  of  its 
cost,  for  the  Company  could  not  borrow  at  as  low  a  rate  of 
interest  as  the  City. 

Still  the  Company  made  every  effort  to  secure 
The  Struggle  tne  passage  of  that  bill,  and  to  defeat  the  Board 

of  Trade  bill,  although  under  it  the  City  was  to 
Permanency  «  «. 

pay  the  cost  and  lease  the  subway  to  the  H,le- 

vated  Company  at  a  rental  of  \%  %  •  The  real  objection  of 
the  Elevated  Company  to  the  Board  of  Trade  Bill  was  not 
that  it  imposed  too  great  an  immediate  annual  charge,  but 
that  it  granted  a  lease  for  only  20  years  ;  whereas  the  purpose 
of  the  Elevated  Company  throughout  has  been  to  secure  a 
franchise  for  a  long  term  of  years  in  the  hope  of  its  resulting 
ultimately  in  a  permanent  franchise. 

It  is  urged  that  the  rental  should  be  less  than 

Relation  of         the  4^%    which   was   fixed    in   1896   for   the 

e"  °  rental  of  the  existing  subway  because  the  rate 

of  interest  has  fallen  since  1896,  and  the  City 
can  borrow  cheaper  now  than  it  could  then.  Confessedly, 
the  rental  must  be  large  enough  to  meet  not  merely  the  annual 
interest,  but  also  the  annual  sinking  fund  charge.  The  amount 
of  the  annual  sinking  fund  charge  must  be  sufficient  when  re- 
invested at  the  then  current  rate  of  interest,  to  yield  at  least 
enough  to  pay  the  bonds  at  maturity.  As  the  rate  of  interest 
is  falling,  a  larger  sinking  fund  charge  becomes  necessary. 
Hence  a  decline  in  the  rate  of  interest  does  not  materially 
reduce  the  amount  of  rental  necessary, because  a  larger  sinking 
fund  charge  is  required. 

13 


EIGHTH.  Mr.  Pillsbury  says  :  "  Our  tenure  of 
Those  Elevated  our  elevated  locations  is  permanent.  If  we 

create  the  tunnel,  a  substituted  and  better  ele- 
vated location  [through  the  city  for  the  Elevated  road]  there 
is  no  reason  why  our  tenure  of  that  should  not  also  be  per- 
manent." "  We  now  have  two  such  locations  upon  which  the 
demands  of  traffic  might  drive  us  to  build  if  we  cannot  do  better." 

Mr.  Pillsbury  doubtless  refers  to  the  following 

locations  originally  granted  to  the  Meigs  road 
by  the  Act  of  1894,  c-  548- 

"To  and  through  Beverly  street,  to  and  through  Hay- 
market  Square,  to  and  through  Union  street,  to  and  through 
Dock  Square,  to  and  through  a  new  street  which  shall  be  built 
by  said  city,  of  the  width  of  eighty  feet,  and  one  half  of  the 
cost  of  which  shall  be  paid  by  said  corporation,  in  the  line  of 
Congress  street,  between  State  street  and  Dock  Square,  to  and 
through  Congress  street  and  Post  Office  Square,  to  and  through 
Federal  street,  to  and  over  Federal  street  bridge."  .  .  .  . 
"  To  and  through  Cambridge  street,  to  and  over  Craigie 
bridge  or  a  new  bridge  across  Charles  river  to  a  point  on 
Charles  street,  between  Allen  and  Poplar  streets  in  Boston, 
through  Charles  street,  to  and  through  Leverett  street,  to  and 
through  Brighton  Street,  to  and  through  Lowell  street,  to  and 
through  Causeway  street,  to  and  through  Portland  street,  to 
and  through  Merrimac  street,  to  and  through  Washington 
street,  to  and  through  Dock  square,  to  and  through  Devonshire 
street,  to  and  through  Franklin  street,  to  and  through  Arch 
street,  to  and  through  Chauncy  street,  to  and  through  Harri- 
son avenue,  to  and  through  Kneeland  street,  to  and  through 
Washington  street  to  its  junction  with  Hyde  Park  avenue." 

Think  of  the  Elevated  Company  building  on 
To  and  either  of  these  locations.  The  land  damages 

would  be  greater  than  the  whole  Elevated 
stock  even  at  the  present  high  value.  Such  locations  are  about 
as  valuable  as  locations  to  and  through  the  moon.  Think  of 
the  Elevated  Company  being  '  driven  to  build '  on  such  loca- 

14 


tions  when  the  City  offers  to  let  the  Elevated  Company  have 
the  subway  at  a  rental  of  not  more  than  it  would  cost  the  Ele- 
vated as  an  annual  charge  if  it  built  and  owned  the  subway 

itself. 

********* 

Board  of  Trade   Hill. 

No  reason  has  been  shown,  no  reason  can  be 
Endorsed  by  shown,  why  the  bill  introduced  by  the  Asso- 
Opinion  and  dated  Board  of  Trade  and  the  Public  Franchise 
Precedent 

League  should  not  become  a  law.    It  rests  upon 

the  solid  foundation  of  past  experience,  for  it  is  but  an  ex- 
tension to  Washington  Street  of  the  existing  Subway  System. 
It  embodies  the  fundamental  principles  of  public  ownership 
and  control  by  short  lease  which  Governor  Crane  has  made 
the  recognized  policy  of  the  Commonwealth.  It  is  adopted 
and  urged  for  immediate  passage  by  Mayor  Collins  as  ex- 
pressing the  wishes  of  the  people  of  Boston.  It  is  supported 
by  the  trade  and  the  labor  organizations  and  an  almost  unani- 
mous public  opinion.  Its  provisions  are  simple  :  Construction 
by  the  Transit  Commission  at  the  expense  of  the  City,  the 
subway  to  be  its  property  forever ;  lease  to  the  Elevated 
Company  for  25  years  from  the  date  of  the  Act  at  a  rental  of 
4^  %  of  the  cost,  and  if  accepted  the  lease  of  the  existing 
subway  to  be  extended  so  as  to  expire  at  the  same  time 
(1927)  ; — Rights  to  lease  to  some  other  company  if  the 
Elevated  does  not  take  the  lease.  Referendum  to  the  people 
of  Boston. 

The   bill   protects   the   public ;    it  is  fair  to  the  Elevated 
Company  ;  it  should  be  enacted. 

The  Struggle  for  Protection. 

As  Mr.  Pillsbury  has  been  unable  to  discover  a 
Fruits  of  single  feature  of  the  Board  of  Trade  bill  (except 

the  amount  of  the  rental)  to  which  even  he 
could  address  any  specific  criticism,  he  has  occupied  him- 
self with  vehemently  asserting  that  the  men  who  advocated 
it  are  impractical  and  ignorant.  It  may  be  proper  to  recall 

15 


some  of  the  practical  results  which  these  men  have  aided 
in  accomplishing  in  the  attempts  which  have  been  made  to 
protect  the  public  from  the  aggression  of  the  railway 
companies. 

1896.  Term  of  the  possible  subway  lease,  reduced  from 
fifty  years  to  twenty  years.  Acts  of  1896,  Chap.  492. 

1896.  Car  toll  provision  inserted  in  lease  of  subway  to 
West  End  Company.      (Transit  Commissioners  and  Railroad 
Commissioners. ) 

1897.  Provision  for  compulsory  building  of  seven  miles 
elevated  lines   inserted  in  bill,  and  free   transfer    provisions 
extended.     Acts  of  1897,  Chap.  500. 

1897.  Length  of  lease  of  West  End  system  to  Elevated 
Company  reduced  from  99  years  to  less  than  25  years.  Rental 
reduced  about  $100,000  by  reducing  dividend  on  West  End 
common  stock  from  8%  to  7%. 

1899.  Referendum  added  to  Elevated  Company  bill  to 
prevent  taking  up  tracks  on  rremont  Street,  and  bill  rejected 
at  the  polls.     Acts  of  1898,  Chap.  390. 

1900.  So-called    Citizens'    Association-Elevated    Com- 
pany bill  defeated.     The  bill  provided  that  the  Elevated  Com- 
pany should  construct  at  its  own  expense,  and  own  in  per- 
petuity the  Washington  street  and  Cambridge  street  subways, 
subject  to  the  right  of  Boston  to  buy  them  at  cost  after  1937, 
if  it  so  voted  sometime  between  1937  to  1940.     It  also  pro- 
vided that  the  lease  of  the  existing  subway  should  be  extended 
to  1937. 

1901.  The  Elevated   Railway  Company's  Washington 
Street  Subway  Bill  defeated.     That  bill  provided  for  the  con- 
struction at  the  expense  of  the  Elevated  Company  and  owner- 
ship by  the  City,  but  was  vetoed  by  Govorner  Crane  mainly 
because  it  gave  the  Elevated  Company  a  forty-year  lease. 

The  public  interests  have  been  protected,  transportation 
facilities  have  been  increased,  and  Elevated  Company  Stock 
has,  nevertheless,  risen  from  105  to  170. 
BOSTON,  April  26,  xgoi.  LOUIS    D.    BRANDEIS. 

HPSR     I1RRA 


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